Dry ATMs and the Monetary Shortage across Indian States

In many Indian states a cash crunch has been reported with people experiencing difficulty in withdrawing cash. The shortage of cash in ATMs is being seen only as a momentary logistical issue that would be solved soon but will it represent greater economic decadence?

The New Leam Staff

ATM is out cash/ Image : The New Leam

From many states of the country it has been reported that people are facing a shortage of cash in ATMs. After much discussion about why this situation arose and what could be its possible economic repercussions that ruling government in the centre has said that overall there is more than sufficient currency in the market and the contemporary crisis of notes is only a momentary problem that will be solved soon.

Many senior politicians of the ruling government were trying to make the public understand that the crisis in money that they were facing now would be solved immediately and it did not indicate any economic issues. A Reserve Bank of India (RBI) stock taking analysis reported that across the last three months the rate of cash withdrawal was greater than usual in states such as Bihar, Karnataka, Maharashtra, Telangana etc. The shortage of cash was reported mainly from these states. The ruling government informed the public that the present crisis would be solved soon when the specially designed committees to look into the matter and distributed cash equally among states will finish its task. The Finance Minister tweeted that the issue will be addressed soon and the issue will be fixed.

To make sense of why this shortage of cash is taking place it is significant to acknowledge why a shortage has happened. The current currency in circulation is around 18.04 trillion and the currency that was in circulation during demonetisation was 17.74 trillion. The Indian economy has grown since the time of demonstration but the circulation has not grown in that fashion. There is a shortage of notes due to logistical reason and transportation issues. Management of cash throughout all states has to be seen and all states have to get a similar number of currency.

In states like Telangana and Andhra Pradesh the great cash withdrawal has taken place because as people feared losing their money if their bank went bankrupt. This has led to more money being withdrawn than being deposited in banks. An amalgamation of factors has led to the shortage of notes in the ATMs.